Contract Life Cycle Definition
Every contract has a life cycle, beginning with the negotiation of terms and culminating in the performance of obligations under the contract. In between, there are a number of key steps that take place, including execution of the contract, performance monitoring, and closeout.
The negotiation phase is when the parties to the contract discuss and agree on the terms of the agreement. This phase can be lengthy, depending on the complexity of the agreement and the negotiating skills of the parties.
Once the terms are agreed upon, the contract is executed, or signed. This signals the start of the contractual relationship and creates binding obligations on both sides.
After execution comes performance monitoring. This is when both parties make sure that they are living up to their end of the bargain. If there are any problems, they can be addressed during this phase.
Finally, once all obligations under the contract have been fulfilled, it enters into closeout. This is when final payments are made and any loose ends are tied up. After closeout, the contract is considered complete.
